UK

More dark clouds over Spain

The week is ending in a similar fashion to which it began, namely with markets broadly in retreat from risk. There’s little reason to feel that today will be much different. The focus is on Spain and its expected announcement of just how bad the government believes the bad loans situation is for the banking sector there. Meanwhile, Greece is still trying to stitch together a government from the results of the weekend’s election. Read more

11/05/2012 @ 07:11 GMT

Europe's austerity backlash

After the pounding meted out to risk assets overnight in response to the austerity backlash evident in both the French Presidential and Greek election results, both traders and investors can be forgiven for feeling quite unsettled. Although electoral disaffection with sustained harsh fiscal medicine is perfectly understandable, it is an open question as to what the realistic alternatives are when so many European sovereigns have so little financial manoeuvrability. Read more

07/05/2012 @ 07:23 GMT

UK property picture still cloudy

Obtaining a clear picture of the UK property scene has been even more tricky than usual this year. Read more

04/05/2012 @ 12:29 GMT

Central bank introspection

Central bankers are going through something of a personality crisis at the moment and last night’s speech from Bank of England Governor, Mervyn King, was a good example of this. There are many interpretations of what he said, whether he was admitting his part in fuelling the crisis. There’s a general admission that inflation-targeting, as adopted by many countries over the past twenty years or so, is not a sufficient approach, but there’s no real unanimity around what combination of targets and policy levers should be adopted. Read more

03/05/2012 @ 09:14 GMT

Sterling continues to sag

Now that the UK has officially entered recession once again, the focus is on just when the economy is likely to crawl out of it again. As we mentioned last week, the recession label misses the point, namely that the economy has been very weak regardless over the past two years, with growth contracting in four of the past eight quarters and the economy still more than 4% smaller (in real terms) than the peak in output reached in March 2008. That there have been two consecutive quarters of contraction is not of great significance economically. Read more

01/05/2012 @ 09:40 GMT

Cautious optimism from the Fed

The Fed decision last night was not expected to rock the boat, but the subtleties cannot be ignored given the reliance of many asset markets upon the Fed’s continued easy money stance. There was a subtle upgrading of the Fed’s growth outlook, the statement acknowledging an improvement in the longer-term picture. Although the Fed’s commitment to keep “exceptionally low levels” for rates until late 2014 remains, the charts released with the statement show a notable proportion of the non-voting members are looking to raise rates earlier. Read more

26/04/2012 @ 07:20 GMT

UK recession is not the issue‏

The headline writers will be having a field day in tomorrow’s UK papers, now that the country has officially entered recession once again, the economy contracting 0.2% in Q1, after the -0.3% decline in Q4 of last year. But it’s a fairly arbitrary distinction, not least given that the anticipated 0.1% quarterly increase would still have left output lower vs. six months ago. One of the factors dragging the economy down was the construction sector, which contracted a further 3.0% on the quarter. Read more

25/04/2012 @ 09:57 GMT

The pound’s purple patch

This morning’s stronger than expected retail sales figures make it even more likely that the UK economy avoided falling back into recession last quarter. In the three months to March, the volume of retail sales rose by 0.8%, quite a respectable performance. Moreover, apart from sluggish demand for clothing and footwear, growth in consumer demand in the first quarter was broadly based. Naturally, the month of March was aided by a surge in fuel sales; it being the warmest March for 55 years also helped. Read more

20/04/2012 @ 09:52 GMT

A lovely shiny pound

Of the major currencies it has been the proud pound that has been leading the way so far this year. Following yesterday’s less dovish MPC Minutes and the surprisingly strong employment figures, cable is back through 1.60 once more and EUR/GBP is at a 20mth low of 0.8180. Against the Japanese yen the pound has advanced by almost 10% so far this year. Read more

19/04/2012 @ 07:23 GMT

UK QE loses its biggest sponsor

The minutes of April’s Monetary Policy Committee (MPC) meeting revealed that the biggest supporter of QE in the UK lost its main sponsor, Adam Posen. Since October 2010, Posen has been pushing for further QE at nearly every meeting, only falling into line in after the agreed increase in October 2011. But even before 2010 (he joined the MPC Sept. ‘09) he was more often than not the biggest proponent of further QE. Read more

18/04/2012 @ 09:44 GMT

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